Ann Summers has kicked off talks with the British Property Federation (BPF) that will likely lead to the launch of a CVA after failing to negotiate better rental terms with some landlords.
The lingerie retailer said while over half of the landlords across its 90-strong store estate have agreed to change to turnover-based rents, several have been unwilling to adjust their terms.
As a result, Ann Summers said a CVA arrangement is now likely, though the retailer will only be pursuing the arrangement at stores where landlords have not agreed to turnover-based rents.
The business reported a 14.4% rise in sales in the three months to September 26, but has said a lower rental cost base is “critical to ensuring that Ann Summers’ lease portfolio is sustainable in the medium to long term and that our rental outgoings reflect consumer footfall due to the Covid-19 pandemic and an overall shift towards online shopping”.
Ann Summer said in a statement: “While a CVA is not certain, it is likely we will have no option but to proceed with such a process imminently unless we see a shift in the position of our remaining landlords in the coming weeks.”
Chief executive Jacqueline Gold said: “Despite all the challenges of the pandemic, our turnaround plan is progressing well and alongside our successful online and direct selling businesses, we believe our stores have a significant role to play in our future plans.
“However, in order to ensure the business’s stability and to protect as many stores and jobs as possible, it is likely we are going to proceed with a CVA to address property costs – both rent and future business rates – which are no longer appropriate in the post-Covid world. I hope that we can count on the support of our landlords and their industry representatives as we embark on this process.”
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